INCOME TAX ACT, 1961

Section 80P(2)

Deduction under section 80P(2) - Interest income from nationalized bank - Allowability -

Assessee-society was engaged in business of providing credit facilities exclusively to its members and claimed deduction under section 80P. AO disallowed the deduction claimed by assessee alleging that assessee-society had received interest income out of which interest income from nationalized bank, which was other than Co-operative Society and claimed deduction under section 80P was in contravention to the provisions. Held: High Court in the case of SBI v. CIT (2016) 389 ITR 578 (Guj) : 2016 TaxPub(DT) 3564 (Guj-HC) had held that interest earned from investment made in scheduled bank by a cooperative society engaged in providing credit facilities to its members, was not eligible for deduction under section 80P(2). Tribunal in earlier occasions on similar issue had taken a consistent view by following above judgment of High Court. However, any expenditure incurred by assessee for earning such income could be allowed to it, if not already allowed. In other words, AO had to allow pro-rata expenses in respect of interest income earned from deposits held with nationalized bank.

Followed:State Bank of India (SBI) v. CIT (2016) 389 ITR 578 (Guj) : 2016 TaxPub(DT) 3564 (Guj-HC).

REFERRED :

FAVOUR : Partly allowed by way of remand.

A.Y. :

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